As I started investing, I came to realize what to look for in a property to maximize its rental potential. One of our property managers came up with the acronym “PPPLLL” and I really like it. This stands for the following:
P – Price. If your rental price is too high, you will not get any interest in a property.
P – Parking. If the tenant has to park on the street, many tenants will say no to a property.
P – Pets. Did you know that over 50% of tenants have a pet? If you exclude pets, you are excluding ½ of the tenant base.
L – Location. If you buy in a bad area, tenants know and will not move in even if you completely renovate with granite countertops and stainless-steel appliances.
L – Layout. We manage a three-bedroom apartment where the one bathroom is between two of the bedrooms. What happens if the person in the third bedroom has to use the bathroom in the middle of the night? If the layout does not make sense, it severely limits the desirability of the unit.
L – Laundry. Sometimes tenants insist on not having to go to a laundromat to wash their clothes.
For really high-end properties, you can probably add a “D” in there as well for dishwasher. If the rent is high and kitchen is really nice, tenants are going to expect a dishwasher.
As owners you automatically control the price and pets. You can make updates to a property to add laundry. If you need to renovate the unit, you should always consider the layout and how to improve it. Parking is difficult to fix but not always impossible. The only one you cannot fix is location. This is why the first, second, and third rules of real estate is “Location, Location, Location.”